Scales Tipping to Landlords as Law Office Rents Rise
- Jan 13, 2014
Concessions and rent breaks in law firm office space are going, going—and close to gone, even as a few prominent cities prove the exception to the rule. According to Jones Lang LaSalle’s annual Law Firm Perspective, rents have increased an average of 2.1 percent overall across the 41 U.S. designated “law firm markets” in the last year—up more than 14 percent from 2009. While law firm relocations this year included downsizing by an average 15.2 percent, the legal sector is collectively leasing more space nationwide.
Furthermore, law firm lease negotiations now favor landlords in approximately half of all U.S. markets for the first time in seven years, according to the report. The research predicts that by 2016, 93 percent of cities will offer leverage to landlords over law firms.
Below are current trends influencing the market for law firm office space:
- Still room for negotiations in major law markets: Primary law firm markets, including New York, Washington D.C. and Los Angeles, will continue to offer firms leverage over the next 18 months, remaining tenant-friendly for now. This is due to economic challenges creating tepid demand from industries like financial services.
- Limited supply in hot markets is driving extra tenant demand: In cities benefiting from technology- and energy-industry growth, rent is skyrocketing for corporate tenants of all types. Within the last twelve months, rents in tech hub San Francisco have increased 12.2 percent, and in Dallas, success in the energy sector has spurred a 12.6 percent rent spike.
- Smaller offices – more windows: Even though the average space used per attorney has decreased by a third—from 900 to 600 square feet—law firms still prioritize offering window offices to their attorneys. Although those offices may be smaller, law firms believe it’s critical for recruiting and retention. As as result, law firms are leasing space in buildings with comparatively smaller floorplates, averaging around 25,000 square feet.
For more details, download the full Law Firm Perspective report.